 Okay, I think we can start. It's my great pleasure to moderate this very, very important session which I have done for a number of years, and I've always enjoyed enormously. Whether the panelists have enjoyed as much as I have done is, of course, an open question. Maybe that's why I'm invited back. The issues, obviously, in front of us are of enormous interest and importance. Before I introduce the panelists, not that I think they need much introduction, I will just set out very briefly where I think my sense of what, of where we are in this World Economic Forum. And the issues that we are going to have to address in thinking about 2012, both what might happen to the economy and the big policy questions. The agenda is very long. We will do our best to cover it, and we will certainly leave sometime questions and answers. My sense of the mood in Davos is that people are feeling relief in the way that somebody who has just been reprieved from hanging feels a relief, that instead of facing the imminent prospects of catastrophe, there is a sense that things have been done which have eliminated very substantially the immediate risk of disaster, particularly in Europe, particularly because of the activities of the European Central Bank, though not exclusively so, and that, therefore, we can start thinking about the slightly longer term, which means at least a few months, and perhaps even longer, but they, at the same time as the IMF reminded us this week, the prospects for this year look pretty bad. They have downgraded global growth and developed country growth in particular very significantly. Growth, I remember, if I remember correctly, down to 3.3%, and with the Eurozone now expected to be in recession, so the long story of difficulty, particularly in the developed world, what I think of as the great deleveraging, which is now following a financial crisis that began four and a half years ago, remember how long we have been in this, and nobody can say that we are through it, so this is not even clear that we are through the half way. This is an incredibly long process we have been in with recurrent crisis and now increasing concern, of course, about sovereign debt, quite particularly in the Eurozone, where the stresses have been very, very extreme. So that is one part, the downgrading of growth as a result of what I think Madam Lagarde has referred to as self-inflicted wounds by the developed countries, and we all know what she is referring to. At the same time, and I just like to remind you of one or two statistics, the developments in the rest of the world, above all in the emerging world, have been quite staggering. If you go back to the October 2011 World Economic Outlook, and you looked at the IMF's forecast for 2012 and converted this back to a 2007 base, so that is when the world, just when the world economy was moving into crisis, and you ask yourself what has happened to the economies of the world as the IMF forecasted from 2007 to 2012, you will discover that according to the IMF forecast, over that period China's economy will expand by 60%. The Asian developing and emerging countries, which is, I would remind you, half of the world's population will expand by 50%. The emerging world by well over about 35%, and the developed world by essentially zero. So for this five years has seen the most extraordinary and unprecedented speed of transformation of the relative weight of countries. So in addition to this great deleveraging, there is this great convergence, these two processes are shaping our world, and it's obviously what we want to focus on. So with that little introduction, let me just introduce you to the panelists, starting on the far left is Robert Zerlich, of course president of the World Bank Group. The World Bank has been a frequent member of this panel. Next to him is Governor Mark Carney from Canada, who is also now chairman of the Financial Stability Board, responsible for the regulation of our financial system. Next to him is Deputy Prime Minister, is this not working? Oh, that's good. Sorry, I had no idea. Okay, next to him, let's hope that's not true for everybody because it's going to get very awkward. Next to him is Deputy Prime Minister Ali Babacan, who has of course been responsible for economic policy in Turkey for a long time. Next to him is Christine Lagarde, who's been previously on this panel as finance minister of France, but of course is now managing director of the International Monetary Fund. Next to him is Mr. Donald Tsang, who's chief executive of Hong Kong. Next to him is George Osborne, Chancellor of the UK, and Chancellor of the Exchequer. And finally, Minister Furukawa, who is minister for national economic policy of Japan. For some reason that I cannot even begin to imagine there is no representative of a Eurozone government on this panel. And I certainly don't take it personally. So I'm going to start off then with you, Christine Lagarde, if you could set out how you and the fund now see the world and how concerned you remain, despite some of the things, the improvement in tone about the world economy in 2012 and the issues that confront us. Thank you. Thank you very much, Martin. Does that work? Great. You've asked us on the panel to focus on solutions, and I will try to do that, but I would like to preface that with just three comments. Number one, no one is immune in the current situation. It's not just a Eurozone crisis. It's a crisis that could have collateral effects, spillover effects around the world. And, you know, we'll hear from others. But what I have seen and what we're seeing in numbers and in forecast is that no country is immune and everybody has an interest in making sure that this crisis is resolved adequately. Number two, I would say that now is the time. There has been a lot of pressure building in order to see a solution come about. And number three, I'd like to just refer to Churchill if I may, who used to say that we have the tool, we must do the job. The IMF is one of the tools, but we need a toolkit to actually address the crisis as it is at the moment unfolding. And focusing on solution, Martin, if I may, I'd like to address the European current situation, particularly the Eurozone. Then what other countries need to do as well, because as I said, it's a toolkit and it's not going to rely exclusively on one single region. And number three, what the IMF can do. Turning to Europe and to the Eurozone in particular, the IMF sees three necessary solutions to the current situation. The first one is about growth. And growth will be critical for many reasons. To deal with the job issue, to deal with the fiscal consolidation necessity, and I'll come to that in a second. And to just encourage value creation in a part of the world where as you said in the last five years, there's been pretty much zero growth. And growth, in our view, is predicated on essentially two components, monetary policy aside, which is obviously another one. But I would like to focus on the other two. And the first one is combination of liquidity so that banks in particular have sufficient liquidity and clearly what Mario Draghi head of the ECB has done in the last weeks of December is critical. But also, more importantly at the moment, a decent firewall. There is work underway. There is progress as we see it. But it is critical that the Eurozone members actually develop a clear, simple firewall that can operate both to limit the contagion and number two, to provide this sort of act of trust in the Eurozone so that the financing needs of that zone can actually be met if the finances of the world are not interested in that zone. And the second aspect that will actually build growth in that zone is obviously competitiveness. And competitiveness is a very important factor that needs to be tailor-made, that needs to be customized to the country, as is fiscal consolidation. And if I can deliver a very clear message, Martin, on this one, it's that we are not suggesting that there should be fiscal consolidation across the board without differentiation and without specific treatment adjusted to the specificities of the country. Some countries have to go full speed ahead and do that fiscal consolidation that is so much needed. I would include in that category certainly those countries that are under-programmed and a few others. But other countries have space, have room and can do something. And there are not many of them. I can't think of one or two. Those ones, they should certainly explore what they can do to actually boost growth in their respective quarter in order to help themselves, but also in order to help the rest of the zone. Just like competitiveness has to be tailor-made and adjusted to the weaknesses and strength of a country to its comparative advantages and to the demand that is addressed to it. Equally, the fiscal consolidation that is needed need to be adjusted, need to be customized to the country and cannot be just across the board because otherwise it will simply strangle the little growth that there is or that there could be. That's as far as the growth, firewall and liquidity. Third component that we see as a necessity for Europe is clearly more integration. I've said it. I will be happy to repeat it. In addition to having a monetary zone, the eurozone needs to develop this fiscal consolidation compact that is currently in the work and that we hope will be strengthened and validated on Monday at the Leaders' Summit. And further pursued because it's a process. I certainly agree with Chancellor Merkel that it's not a sprint and so it's a marathon, but one along the way of which there needs to be deliverables. Turning now to the US and Japan because this session cannot be all about Europe, Europe, Europe, although the eurozone has to do very important things very quickly. But turning to the US and Japan in particular, those two countries are running higher deficits than the eurozone on a consolidated basis. They run very high debt, completely different structure depending on whether you sit in Japan, the US or the eurozone. But equally, those countries have to anchor in the medium term what they're going to do about this constant regular deficit in the last few years and how they're going to turn around the debt trajectory that that is theirs at the moment. Emerging market economies and particularly those that are in a surplus situation, they have to continue what they have begun to do, which is to actually reconcentrate on the internal market on the domestic consumption rather than rely too exclusively on export and investment. That could apply equally to advanced economies that are in a surplus situation. So that's pretty much what can be done by the eurozone in particular, by the rest of the world. I recognize that it's very sketchy mountain, but in the interest of being brief and to the point I've decided to be a little bit elliptic, what the IMF can do because the IMF is one of the tools that are referred to earlier on is clearly to act as an aggregator of trust as a propagator of stability and certainly in that process needs to demonstrate the multilateral support of its membership to actually accommodate and supplement some of the situations not in the eurozone, but in any country that is a member of the IMF there will be needs in the eurozone, no doubt about it, but in Central and Eastern Europe there will be needs as well. And in other countries including in low-income countries, including in middle-income countries, there will be needs short term for some, longer term for others and it's for that reason Martin that I'm here with my little bag to actually collect a bit of money, thank you. I take it that this is not a plea to the business leaders for a philanthropic gesture, but we will certainly come back to the question of IMF resources after the introductory remarks. I'm going to turn now to Governor Mark Carney, how you see the world economy. You are presiding over an economy that seems to be happily immune presiding in the monetary sphere obviously. Some people say that, a number of people said that the striking feature of this crisis is all the countries that have recently had crises by, I mean in the last three decades, have managed to avoid a crisis this time and actually at least two are represented here, but I also would like to your view on how you see the financial sector more broadly in your present role and its resilience, because that's been an enormous concern in the last few months and I think it can't have really gone away just because Mario Draghi's decided to provide you more money than before, so what's your perspective on where we are in those two respects? Thank you Martin. Just in terms of overall outlook, I absolutely agree with the IMF. I mean this is a 3% growth world, roughly a 2% United States, an 8% China decelerating but to a still strong pace. Importantly in that though is the impact of the Eurozone crisis in our view, the impact of Europe on the level of global GDP is about 1% off the level of global GDP at the end of 2012, so we're all going to feel this and that's in a world where this crisis is contained and containment is different than resolution, so why is there the impact, there's an impact in terms of the order of austerity in Europe, we have Europe down 1% a little more than the IMF for 2012 but secondly through financial channels and I'll get to that in a moment. To go back to where you started at the very beginning though, we are in a great deleveraging in the advanced economies and it's very hard to grow economies unless you're, it's very hard to delever unless you're increasing leverage somewhere else and there's only really two options in the world, the corporate sector and the emerging markets as a whole and we'll hear more directly from colleagues on the latter so I'll focus on the corporate sector in the link with finance and I think part of the mood here in talking directly to the real economy is there's a lot to do but there's a great deal of uncertainty, we've contributed to that from our respective roles and our respective jurisdictions, I'll give you one fact or anecdote if you will, the M&A backlog at major investment banks is at an all time high, so the number of potential transactions that CEOs are contemplating and the equity backlog is also at an all time high. The actual execution of these deals is frightfully low, anyone who's seen the most recent results of the major investment banks would know that. The point is there's things to do but people aren't understandably pulling back. Now you reference the measures of the ECB in December and upcoming absolutely taken tail risk out of the financial system which is incredibly important, there is not going to be a limited style event in Europe that matters but that is different than having a well fully functioning banking system in Europe, a banking system that's lending to the real economy. We see deleveraging effects, perspective deleveraging effects, I don't think we're really seeing these yet, in a number of key financial markets, in project finance, in trade finance, in the commodity markets there is a direct pull back by European institutions. We also, I think we should be conscious that the majority of foreign holders of emerging market debt are European and some of this pull of capital back into Europe has directly affected emerging market capital flows, so we're getting a perverse flight, maybe not to quality but flight home bias from where we need growth and need capital to be where it's being repaired. You know overall in terms of where the financial system and I'll conclude with this, the system is much healthier as a whole than it was in 2008. Capital is increased in virtually all jurisdictions although the least in Europe which is one of the fundamental issues. Liquidity is up substantially in all jurisdictions, in fact there's probably too much liquidity being held directly in the financial sector and those are the positives and a number of structured markets and other markets that cause problems have diminished very much in importance. The other way that financial resilience is increased though is less positive and I'll finish on this which is that the contingency measures that institutions are taking for the possibility of a more adverse outcome in Europe and elsewhere are holding back their willingness to provide finance across a range of projects so implementing Christine's solutions will make a real difference in terms of corporate attitudes I think but also in terms of the direct supply of capital. Thank you very much. One of the issues that is I think very much raised by this which perhaps come back to which a lot of the bankers complain about is that they're being asked simultaneously immensely to improve their capital ratios and to increase their lending. So I'm sure you'll want to address that sort of concern and indicate how completely coherent and cohesive and together the policy direction is for the world economy. Let me now turn to you Chancellor. You are in the slightly strange position of being the nearest we have to somebody who can speak for the Eurozone. This is, the irony will not be lost on anybody but anyway you are in the meetings on this. I'd like you to think a bit about from your perspective where the UK is in this context what the options for the UK are and also particularly where you personally think the Eurozone has got to and what you might add to Christine Lagarde's indication of the priorities and one of the issues there perhaps we can touch on now or perhaps go come to later is what you think what you think the role of the IMF needs to be in that crisis. Thank you Martin and yeah I'm looking forward probably the only time in my life I intend to speak for the Eurozone. I think the mood, people have commented on the mood at this conference being quite somber but having been here for a couple of days people have also pointed out that actually people are slightly more optimistic at the end of the week than the beginning even if as you put it Martin that's because they haven't been hanged. I think of course that the economic challenges are very self-evident to particularly Western economies particularly European economies and the UK is certainly not immune to that but I think if I would focus on three things which I think lie within the hands of policymakers positive actions that would turn a more optimistic mood at the end of an early week of January into a more optimistic outlook for the world economy at the end of this year I would focus on these I mean first of all the Eurozone I think it's important to recognize that for elected politicians to achieve what has already been achieved in the Eurozone is incredible has been a real act of courage to pull your national resources into a common funds to help other countries is very controversial to undertake austerity measures usually gets you kicked out of office unless you manage that correctly to to undertake difficult structural reform of pensions or labour markets is again very controversial and a lot of these things have happened over the last 18 months within the Eurozone and I think we should credit that but I think more needs to be done I think the Eurozone understands that and I think it needs to happen in the next few weeks and the two things I would focus on our first of all the creation of this firewall is been much talked about but I think that is now a key to unlocking further confidence and the second thing which I'm not sure has been mentioned yet is Greece I mean the fact we're still in the beginning of 2012 talking about Greece again and I think Greek is a sign that this problem has not been dealt with that this is the the danger here is that the tail wags the dog throughout this crisis in other words the inability to deal with the specific problems in the periphery causes shockwaves across the whole European economy and the world economy and and concluding the the deal that will lead to a more sustainable situation in Greece I think is actually fundamental to stability in the Eurozone but I think those things can be done and I think they can be done over the next couple of months the second thing I think that needs to happen is I think policy makers need to get a greater grip on the deleveraging process now part of that is a deleveraging of of public sector debt and obviously speaking about you know talking my own book I think we've demonstrated in the UK that even if you have a very high budget deficit and we have one of the highest in the world a credible plan to deal with it can command market confidence give you very low rates in the market and provide a a platform of stability in an otherwise very volatile time I think the other thing that we I think all need to better understand is the deleveraging happening in the financial system an inevitable consequence of a of a financial crisis and a balance sheet recession but I think the point the mark made is something I would like to see more attention to from policymakers over the coming weeks which is the the sort of balkanization of European finance which has happened as a number of institutions and individuals have taken actions to protect themselves from the tail risk of things going wrong in the euro and what the impact will that be on on the European economy and how that can be unwound which I think is very important and I think one of the things we can all do is also provide regulatory certainty this year of course it's inevitable after a big banking crash that you consider how to avoid these things happening again and certainly in Britain and maybe we can come on and talk about that we've done a lot of work in in looking at how we can better protect our banking system work that Martin himself was involved in but we now need to move to point where we tell everyone what we're going to do give clarity on the rules I would include the United States in this with the Dodd-Frank legislation and again provide some stability which will provide a platform for investment the final point I make is that I think we need to restore some confidence in the ability of the multilateral organizations to work effectively we can come on and talk about IMF resources and I think there is a case for increasing IMF resources and I think that would also be a way of demonstrating that the world wants to help together solve the world's problems but I think that's also an important task ahead for the FSB and Mark this year and on trade which you know I continue to think is one of the most disappointing features at the moment of the world that we have not been able to pick up the free trade agreement that we know would act as a significant economic stimulus not just for the real benefits it would bring but also because it would demonstrate that we are able to take collective action for the common good I think in the absence of that I think it is actually positive to see more regional trade agreements in the European context the deepening of the single market and bilateral agreements in the case of Europe bilateral agreements between the European Union and for example India which I think would again demonstrate that we are not retreating into protectionism but actually moving forward in opening up markets all those three things are within the hands of policymakers they are not they are not things that we require acts of God or and unguidable forces of nature to deliver these are all things that people such as the people in this room can get together this year and deliver. Thank you very much man I'll turn to I mean the issues you've raised will absolutely come back to you if at all possible pretty well all of them I think let me turn to you now Deputy Prime Minister Babajan perhaps I very much want you to talk about your own country in the region lots going on what are the economic significance of that's obviously a very big issue also obviously you have a I don't know whether we can describe it as a privileged position but a ringside seat on the eurozone a disaster sorry I didn't mean that events and I know you have views on it also particularly relevant because you Turkey of course had a financial crisis quite recently in the last decade and has gone through that and has cope with this crisis from at this point of view remarkably well so no doubt you have lessons to teach us as well so what is your perspective on where we are well let me talk about the current global economic situation and more specifically what is going on Europe and eurozone and if we really want to see sustainable growth job creation employment and so forth there is one very important concept which we I think have to emphasize over and over again and that is confidence when we don't see a medium of confidence when put when consumers don't have trust for future they don't spend when corporations don't have confidence they don't invest and when banks are have doubts about future they don't land and when these don't happen the economy stops financing channels stops and we don't see growth and how to attain confidence how to regain confidence it should be probably at the core of the policies in many many countries and for those countries where public debt is a source of concern we don't think that fiscal stimulus will work if a country has already a high debt and if this debt creates a lot of doubts in the markets simply trying to spend more a set heavens have some kind of growth through just government spending is probably not going to work and in eurozone there has been some unfortunate trials in 2008 2009 trying to give fiscal stimulus and then have a very unfortunate result at the end of the day for those countries where public debt is reasonable and for those who have some fiscal space maybe there might be some efforts but what is most important here is about fiscal policies there's an asymmetry it is always easy to lose on fiscal policies so when in 2008 and 2009 many European governments announced fiscal stimulus programs they were held and they said okay this is going to solve the problems but when it is time to tighten the policies it is very very difficult it has many costs it costs the fortunes of the leaders it costs the fate that the fortune of the of the political parties in many countries and thinking about the fact that of that sensitivity of the fiscal policies it is important to be on the prudent side when it comes to budget and public debt and so forth once keeping the fiscal policy at a prudent phase then for countries it is very important to have a very clear strategy and communicate this strategy very well so that the strategy is owned by the masses because if there is no local ownership of the policies then probably those policies will not work do people understand do citizens of that country understand do they really understand the necessity of the steps maybe difficult steps that is needed for for future and then having a medium term vision is also very important now I have been attending many many discussions in Davos and we have been talking too much about year 2012 but if you are going to talk about growth and employment it is not just the single one year we have in front of us we have 2013 2014 and and for some policy action it might be hurting growth in the short term today but it may generate more and sustainable growth later on so we should probably look at growth and job creation with a medium term approach and the governments announcing these medium term credible programs is going to be very very crucial to bring some predictability about what's going to happen if the companies or the financial sector doesn't have any idea about what's going to happen in year in this year in the United States if we have all big doubts about what's going to turn out in the eurozone this year and if all the mass media is broadcasting this how to expect people to spend more how to expect companies to continue investment or hiring people and how to invest the banks although they have many much liquidity in their hand to do their function of of of landing so this the homework to be done country by country is going to be very important so every single country should keep his house tidy and clean and then international organizations they are important tools but they are not a substitute for the homework to be done in every single single country a more coordinated action is absolutely necessary in the eurozone we hope that this six-pack fiscal compact we hope that this works I think it's absolutely necessary to implement this in the eurozone without any any silipages and also G20 I think has a big role also probably underutilized but an important role to have a better global coordination of the of the policies and it is very important today during this year for the countries within G20 not to just follow their own national interest but also think about the global outlook feel the global responsibility because as Christine said at the very beginning we are living all together and if there's a serious collapse anywhere in the world this is going to hurt all of us nobody is going to have a better position because of a collapse serious collapse elsewhere elsewhere in the world so specific to Turkey as as Martin has very great leaders and we have been very prudent on the fiscal side and in 2009 we announced a very prudent tight fiscal policy a medium term fiscal program to even further down reduce our deficits and many people have big doubts because they told us look at Europe look at everyone else everybody else is increasing spending and you are doing the reverse but it paid off very well the confidence was built up our growth rate was 9% in 2010 8% in 2011 we have been actually tightening things on the monetary policy on the one also on the banking side to contain the growth to prevent overheating or to keep our current accounts deficit under control and so forth so we have followed quite a different path from rest of our European neighbors but we have got also quite difficult different results at the end thank you very much and let me turn now last to Asia and start with Japan and Asia with you minister photo cover please thank you very much I would like to start with the landscape of Japanese economy we accept a relatively stable economy growth rate and low employment rate and we are determined to continue to the financial stabilization of the eurozone and the current government debt crisis in Europe inevitably affect on the global economy within this in mind we expect that Europe makes it at most effort to manage the challenges and endeavors to establish a firewall to calm down the market Japan has been supporting this effort as a major purchaser of EFSF bonds currently holding 16% of the outstanding issues one's further engagement of the international community is required Japan will collaborate closely with other countries and relevant part parties in supporting Europe's firm's actions however I have somewhat of a concern that the crisis may also have a financial effect outside Europe especially on the capital shortage in Asia Japan will intensively concentrate its effort to save off the capital outflow and will proactively commit to Asia's sustainable growth the issues we are currently facing are not limited to the debt crisis in eurozone I'd like to point out more common and other underlying issues this year social connectedness and trust will be tested all around the world because of a number of destabilizing factors the these factors are low economic growth rates high unemployment rates and contentious debates in election campaigns in confronting these challenges the Japanese government is now working on composing a new growth model that pursues three elements all together namely the economy growth social inclusiveness and environmental sustainability Japan will closely collaborate with the economies of Asia and the OECD countries in this airport we should pursue this dynamic and inclusive growth because mere economic growth will not resolve the dissatisfaction in the current economic system as you witnessed last year's Occupy Wall Street and a popular uprising in many countries around the globe are typical examples following this annual forum I'm looking forward to elaborating for further discussion in the international community and lastly I'd like to comment about Japan's fiscal deficit issues it's important to note that Japan's fiscal deficit is a pressing issue in terms of its volume at the same time it's also important to note that vast majority of the debt is financed by domestic saving and we don't think this structure will cause an immediate crisis however tackling fiscal considered consideration is a pressing challenge we cannot leave behind our government has been working on these issues since fiscal year 2010 aiming to have the primary balance debt to GDP ratio in five years both raising the consumption tax rate in a face manner and promoting economic growth through implementing implementing the strategy for reverse of Japan are key components as there are the wheels of the same car thank you thank you very much I'm very glad that you brought in Japan's fiscal position since we've had some very strong positions on this absolutely crucial issue of fiscal austerity which number of people have referred to I'd just like to point out that I have been in these sessions for about 15 years every and everyone that someone has been concerned about the mounting tide of Japanese debt which is of course now far and away the biggest in the world and relative to GDP and every widespread concern about how long this can go on and every year we discover that the Japanese government's long-bond rate continues to be or has been now for a very long time round about 1% which is a problem which I suspect many other countries would quite like to have so the this is quite a complicated issue how fiscal policy interacts with the economy is a very very complicated issue very situation specific that's obvious and getting that situation right is very crucial as Christine Lagarde has mentioned at the beginning earlier on now I'm going to turn to Donald sang to talk about how you view the global economy and sort of from your perspective particularly looking at the Asian context which has already been stressed by others including Minister Furukawa please well according to the IMF latest forecast Asia is going to grow by over 7% in 2012 China one of the big bigger economy in Asia is to grow by more than 8% this year and everything seems to be robust and rosy despite what is happening in Europe in America and in the case of Hong Kong we have we have balanced our books we have we have zero debt and I have reserved we're going to see me through for two years spending and we are we have almost full employment at the moment seems look very nice I have been in public service most of it involved in public finance for over four decades let me share with you I've never been as scared as now about the world what is happening in Europe looking at back what experience was in 1980 the crisis we have had we had and the crisis we had in 1990s this is this is very big issue first of all I agree entirely with requesting that nobody is immune we are all connected with each other look at the speed of a content spread of contagion when we do when we dealt with the Asian financial crisis in in the late 1990s we were dealt largely in Asian issue it was very much we left to ourselves and we overcame it but it never spread to other areas now it's very different in 2008 Ireland suddenly stopped introducing a way in which to protect the bank savings almost that take two days afterwards the whole world follows suit including Hong Kong in other words we are very much after 10 years of the Asian financial crisis much more interconnected than before okay in the case of bank exposure in the case of Hong Kong we hardly exposed to to the European debt sovereign debt issue we've checked all our banks we do we done stress tax test seems all right but what about the counterparties what about the banks you deal with in Europe what about their own clients who have been serious trouble in other words we do not know how deep this hole would be when a whole thing implode on us so looking at America now I do not see a radical solution emerging before the residential election so 2012 is a critical year each one of us have to look at ourselves and what we can do most important to protect the people of ourselves and protect the people of the neighbor how they were to secure the jobs how able to go through life this year then I'm going back to our experience elsewhere maybe it's not relevant to the rest of the world but I can share with you some of things we have found we have found first of all in in a Asian financial crisis we stopped the fire we did something about extraordinary at that time I went into the stock market I bought some shares it was merely condemned and castigated by all over the world by Americans by some Europeans I've got sympathy elsewhere but what I did pale in in significance what we have been what I've seen other people have been doing what is happening now in the world what is in Europe now you need decisive action you need to overkill that's reason what I agree entirely with deputy prime minister of Turkey you need to inspire confidence that confidence must come in decisive action of government working together and do it quickly maybe two months ago you can deal with case of Greece you can deal with a settle it with a 30% haircut now you and 50% is not easy it's not easy to settle 70% maybe it's after books as well so do it quickly and you need resolution and the decisiveness the second thing we have discovered is when we dealt with the Asian financial crisis we do with the institution issue we sought out the bank we sought out of banks we saw we saw the the intermediary the stock markets exchanges irregular regimes and so on we have forgotten the people there are five years of painful deleveraging took place in Hong Kong assets but depreciated extent of 60% somebody owned a home home at home we used to you used to be five million dollars and suddenly and suddenly it discovers only because it's only we're about two million negative assets was very widespread issue immediately immediately your pessimism pervades the society and you have serious problem in our hand in other words you need to have quick fix in the case of this I think we have to look at not only in the funding of banks you must look at SMEs we did very well in 2008 we maintain jobs we secure the firms because we underwrote all the loans to the banks we guarantee all the banks continue lending to your SMEs with our good reputation good track record making sure they able to survive and they did and at the end of the day the default raise almost zero as the government didn't put up anything I just give them all for the opportunity to do this thing and then you must help the poor making sure they see through life we help them we share do the loan the mortgages making sure they were able to pay his electric bills and so on so forth so we have got incentive per package valued at more than six six or seven percent of our GDP over a period two or three years we have got the money to do it but even you don't have the money for do it find a money to do it making sure the grassroot is at ease and they have the jobs ready for them and for that reason you then have gained confidence there and you have domestic consumption going so while we are dealing with all this macro issues the rebalancing of economy the potential supervision all the thing you need to do with the banks and so on must make sure at the end of the day 2012 is a critical year if you can't get through it then rebalancing the effect of that will come through after like 2012 almost in two years after that you have to get through 2012 and remember you have to deal with the people this is where we serve that's what public service all about thank you very much I think you made some incredibly important points first about the fact that somebody like you and observer like you is that frightened which I suspect is very wise and shrewd I'm very very concerned about the recrudescence of complacency over relatively small steps that have been taken please don't go away and think this is fixed in any way second I'm perhaps I can put this is slightly different language you you were at the epicenter of the Asian financial crisis the last really big financial crisis and the western world gave you lots of very useful advice some of which was almost relevant such as speed of action and decisiveness and so forth and we can truthfully said say and surely no one will disagree that the western world broadly has succeeded in failing to take its own advice pretty comprehensively which is why four and a half years after this started we're still in such an impressive mess and four and a half years after the Asian financial crisis Asia was recovering fantastically very very important contrast though of course it was a slightly different problem that gives a cue I think to Bob Zellick to tell us how he sees the world the cons what are the position of developing an emerging countries and all this we talked about capital being pulled back we've looked at the failure to print to finish the Doha around which you started how concerned are you about where we've got to what should be what should we be thinking about of for this year well thank you Martin and I figured at this point in the panel as we have I think you've set out the issues very well so I wanted to try to offer a slightly different perspective so I'll share three observations first when I was at the con G20 summit in November I watched as the emerging market heads of government were observing the European heads of government and it was quite striking as many people here will recall this is right after one of the European summits where it looked like there was progress you had the call for the Greek referendum and frankly the European heads of government were in turmoil and the emerging market leaders were watching with feelings that seemed to me to be first a sense of confusion then frustration and then some sense of of of overall disdain so one aspect of this is this has got to have effects on influence perceptions of power in the world that are going to be quite significant for years to come second observation builds a little bit on what deputy prime minister Bob a John and Donald saying mentioned a couple weeks ago there was one of the first of the G20 deputies meeting and while many topics were discussed I'll share with you the major takeaway that I had from the report which is that the emerging markets were saying you know we encountered this problem before many of the countries around the room from the developed side urges to take difficult reforms we took difficult structural reforms they're painful they take political will now it's your turn get on with it and that leads to the third point which is that whatever we see come out over the course of this year the next years I think the world is never going to go back to the way it was and your statistics that you started out Martin I think is with your second point kind of show some of the significant shifts but it's not only a question of economic numbers it's also going to be a question of perceptions and attitudes and what I see in the world economy now is that emerging markets are certainly not waiting for the developed world to get their act together because they're taking their own steps they're not looking as they might have in the past to the United States or Europe or Japan for solutions and it's a very open question of who will be the exemplars in the system it's not determined it's not necessarily some of the rising powers but it's an open question that relates to the last point which is that what I perceive occurring is as you mentioned you're depending on how you're count you're maybe into the fourth year of this process and there's a danger because there's a fear a weariness of fatigue that's starting to run into the political system at the same time people are scared there's anxiety there's joblessness and you can start to see the creeping populism home country bias sense of separation from the system so in addition to finding some exemplars those exemplars are going to have to pay a role in trying to move a cooperative process forward and in some of the side discussions I've here had with some of the business people it's quite striking there's no absence of resources in the international system mark and I were talking about there's a lot of capital to invest there's lots of possibilities but frankly some of this populism creeping protectionism anxiety about the future possibilities for investment affects the confidence and creates a danger of paralysis so I simply underscore Martin your key point what I picked up in the couple days I've been in Europe is I'm really glad the ECB took these actions but let's not get complacent this buys time you still have to act thank you very much this is raised an enormous number of questions let's just follow a few of them up I'm going to start by looking at the Eurozone a little bit more in this question of firewalls and where they fit in but it leads to something brought and I will address this question initially to Christine Lagarde but I know the others will have some thoughts on this let me look at it from the point of view of the emerging world we are told that or they are told that the IMF needs enormous increase in resources and it's pretty clear to them that it's related to the Eurozone crisis the question obviously arises why should relatively poor countries which have been well managed accumulated large foreign currency reserves contribute large amounts of money to support a zone which seems to be unwilling to support itself thank you Martin four points to respond to your argument first of all no one is immune neither developed countries anywhere in the world nor low income countries nor middle income countries we've never been so interconnected number two as much as an investment it's also a statement of confidence for the multilateral process number three if it is big enough it will not get used and the same applies to the Euro firewall for that matter and number four if it was ever used it's a very safe investment why because the IMF is a highly secured creditor has always been paid back with a return on investment and the reason it is always paid back it's because number one it has significant reserves I have to hold 20% of reserve and more importantly because we never lend without a program without conditionalities and without a very serious thorough follow through to make sure that each and every installment has a consideration in terms of improvement of the macroeconomic situation of the country that takes it back to the market so that it actually pays back the IMF I hope I've convinced you first of all I'm going to see whether you've convinced the panel Mark Carney let's go this is a really big question let's go to the European firewall itself which starts obviously with the European facilities the FSF the SM which I think quite broadly acknowledged are currently insufficient in size and need to be supplemented and that's one of the reasons why madam Lagarde is not even functional and they're not fully functional the SM is much more efficient the FSF and greater focus on that but what's the point of these firewalls themselves I mean we should get right to that and the first point I want to make is something you focused on which is there should be an acknowledgement first and foremost that this is a balance of payments crisis more than a banking crisis and a fiscal crisis there are issues in the banking sector there's issues on the fiscal side but they are more products by products of this fundamental issue and as the Chancellor emphasized one of the disturbing developments right now is that even with the measures of the ECB the European financial system is beginning to renationalize so Italian flows are funding Italian bond purchases and there's less cross border flows that's incredibly inefficient and so part of the point of these firewalls is is to address that and I would submit that one of the key elements of this is also providing some backstop certainty on bank capital doesn't necessarily have to go in could be contingent could be contingent I'll leave it as that but there should be greater certainty on bank capital so that there's greater certainty in terms of cross border flows the other point behind because if there's not in a balance of payments crisis as you know you're restricted you're restricted on cross border finance it deepens the the scale of the downturn in the affected countries it feeds back onto the fiscal side so that's absolutely paramount and then the other obvious purpose for these firewalls is to provide funding certainty for the affected nations over a reasonable period of time which is going to be measured in two or three years we are still going to be talking about Europe next year when we're here so that some of these reforms most notably the structural reforms have time to start to bear fruit now the IMF in the context of more European resources more effective facilities there is a role potentially for the IMF a very constructive role not just for Europe but very importantly as Christine emphasized to provide some precautionary certainty for the rest of the world during this process. Chancellor Osborne if I may ask you about this not as a representative of the Eurozone what is your view actually of the very least everybody I've heard and I've spoken to a number of people privately and I've heard it publicly who isn't part of it the Euro isn't inside the Eurozone insist that the Eurozone itself put up more usable money that they don't there is sort of a sense that they are being out there's a risk transfer going on which is quite unfair and legitimate after all this is one of the richest one of the two biggest economies in the world if you look at an aggregate it's incredibly rich why should this why should the rest of the world come along and do this there's an additional factor and I might come back to this is some people feel and I must say I'm one of them that the IMF has got itself into great difficulty for perfectly understandable reasons with some of the programs it's been got into so that it's not even clear that the IMF can perform its role well within this incredibly difficult context so what do you think needs to be done by the Eurozone itself to make it reasonable to demand or expect a bigger big contribution to the firewall from outside. Well the Eurozone needs to provide a significant increase in available resources I stress both the word significant increase and available in other words has to be a deployable firewall in that sense and and I think the Eurozone leaders understand that that there aren't going to be further contributions to the IMF from other G20 countries including Britain unless we see the color of their money and I think that is a reasonable request our other requests are that the IMF is not in any way debased as an institution in other words all the things we admire about the IMF remain the full conditionality the rigorous independent analysis that it helps countries not currencies and if those conditions are met then certainly Britain would think very carefully about providing further resources and and of course I'd probably have to go to my parliament to recommend it but I would be willing to do so in those circumstances I think if we accepted if we said that the IMF was never going to be there to help countries who had created a single currency then first we would beg the question why those currency countries would want to remain in the IMF because wouldn't necessarily be of any use to them and I think it would also be to undermine the founding principle of the IMF which was that in the end we shouldn't just let people and countries deal with their problems alone that the world should try and help those countries and that was one of the lessons of the last great financial crisis in the 1930s the final point I make is I don't think that is the sort of lasting solution however to the Eurozone ultimately if you're in a single currency as the United Kingdom knows and the United States knows and others you have to transfer fiscal resources around the country to make good differences in competitiveness regional competitiveness and ultimately for all the structural reforms that are going to be undertaken we hope and believe in the Eurozone there's still going to be regional disparities within the Eurozone when it comes to competitiveness and I think the price of having a single currency the remorseless logic of having a single currency is that you make good those differences you ameliorate those differences by transfers of funds whether it's from New York City to Alabama or from the city of London to the north of England those transfers take place and that is what how you can make a single currency work it's one of the reasons Britain didn't want to join the Euro but having the Euro now having been created I think those fiscal transfers are going to be a permanent feature of a Euro that works to pity that we don't have a representative Germany on this panel because I I have a pretty good idea of what the response would be to this suggestion Mr. Tseng don't think you want to go and the outside perspective is really very interesting it's what I'm looking at it from a market point of view when we people concentrate on talking about the size and the strength and who has contributed material for building a firewalls in fact there's other way of looking at it no matter how hard how strong a firewall is the market will look at exactly the nature of economies which is firewalls is protecting if a fire was protecting any economy we're suffering from short term liquidity problem that's one case if the fire was protecting what we call considered to be insolvent economy there's another matter altogether or no matter how hard how strong a firewall is it won't survive the question is how we able to do this it was also economies are protecting at the end of the day if it isn't a question then people look at how this economy will survive in the longer term this is not a question of balancing the books and how we will generate growth so for that reason you have to find ways in which to energize the private sectors in a European economies from a market point of view then making sure in a medium longer term these are viable concerns these are sovereign economies so in that case the question of firewalls would be less significant in my view one of the really big questions is of course making precisely that distinction in the nature in the in the case of states it can be quite difficult to define with what the borderline between liquidity insolvency insolvency and there has been enormous debate obviously in Europe about this but it obviously is linked in part on what sort of growth they get what sort of interest rates they get what sort of policies they pursue there are clearly plenty of countries you can perfectly well argue there are a liquid but insolvent liquid but not insolvent at the moment but at the point is absolutely fundamental and it clearly arises in the case of Greece which we're now dealing with a minister for a car well I just want to mention about speaking of the role the IMF I think that the most important thing the Europe itself at most effort otherwise without you know the firm action of the Europe I don't think that developing countries like China or other countries are not so willing to pay more money for the IMF even if IMF secured the return because you know under the condition that the Europe makes their most effort and they make a firm actions and then IMF can support the European countries and in that condition I think with including our Japan Japan and I think that other countries other international community we're willing to support the Europe through IMF Mr. Baba John well the whole financial system is based on a certain fundamental concept and that is the trust to the state so the value of the sovereign signature and that is at the core of the financial system and also the corporate world functions on top of the that core now when Greece started to have problems a country which is only 2% of the GDP by the way it was very important and we made this very vocal that at any cost the default of Greece should have been prevented even PSI private sector involvement we think it is wrong because when you let a country in the European Union a country in the eurozone to default partially orderly disorderly whatever a default is a default and it has raised the risk premium of the whole eurozone it has raised the risk premium of the European Union overall so every single country has already started to pay for it and now that once that door is open for defaults then it is possible and likely that other countries could also go through that door and once that again coming back to the concept of confidence one that is hurt it is going to take years if not decades to fix this so it what no matter what I think it is now time to show serious demonstration of solidarity and within the eurozone if possible if not possible with the only resources of the eurozone then include other resources but make sure that countries don't default these are countries of the developed world these are the countries of the modern world and these the technicians the academicians the politicians I think what is needed to be done in every country is very well known there is no doubt about what kind of policy action to be implemented what is to be done is known what is important is to go ahead and implement this so when we talk about firewalls and so forth firewall no matter what the number is it has a limit we can talk about okay five hundred one trillion but it has a limit but when we lose the sense of solidarity and when we open doors for defaults then just talking about certain fixed amount of numbers would probably not even be enough to prevent the fires or even bigger fire so before the situation gets really out of hand it is very important to give the guarantees and assurances what kind of method is necessary to make sure that a eurozone country should not default and once that guaranteed once that confidence is taken is maintained and then build up with fiscal with fiscal steps with measures with reforms and so forth but first confidence and then steps to be taken the order is I think very important we there are so many questions right but let's just be just focused on one question people won't be surprised if I raise this because it's all already come through with really quite clear differences of emphasis in the panel so let's get the issue out there which is the role of a steric fiscal austerity who should have it how much how you manage it obviously some people and I fairly well known I'm one of them is concerned that we're we are in a situation when a lot of the private sector is delivering for reasons we know massively so business for a whole range of reasons lack lack confidence I accept that is an issue if the whole range of big governments and remember that the governments we're talking about account for about half the world economy all going to austerity together this is the paradox of thrift you end up actually with a worst fiscal outcome and no growth and that's what we are that somebody like me is concerned about that doesn't give you the the exit strategy now you're very clear that you need fiscal control you are of course to Christine Lagarde has put a somewhat different emphasis on this issue let's get this out so let's Chancellor Osborne let's say how do you see the dangers of the collective rush particularly in the euro zone now everybody consolidating at the same time why do you think this is going to work well I think the issue is debt we are we are recovering from balance sheet recession and let me speak about the UK I became the finance minister when the country had an 11% budget deficit this was the highest budget deficit Britain had ever run outside of the second world war and if I think you've seen over frankly over the last 18 months countries that have not been able to put forward convincing programs of deficit reduction have had to chase the market have seen their market rates go up have seen the problem get worse on them and they've ended up having to do more austerity than perhaps they would have had to done if they'd set out a credible plan legislated for it at the beginning and I think what we've done in Britain has achieved two things one it has kept those market rates low and and so on but it's also prevented a spillover into our financial system in Britain is the home of one of the world's largest global financial centers the home of some of the world's largest banks if there have been a spillover from concern about UK sovereign debt into our financial system it wouldn't just have been Britain that would have suffered the whole world would have suffered so I think it has provided an anchor I don't think it is I think it is necessary but I don't think it is sufficient I've never argued that the only thing you should do is try and reduce your deficit reduce the fact that Britain was consuming 50% of its national income in terms of public expenditure I've always believed you also have to undertake structural reform make a business tax system competitive unsake reforms to education and the like I've never thought it was as I say sufficient it is necessary and as I say I think we've had frankly a rather painful experiment with some of my neighbours of what happens if you don't secure market confidence in your ability to pay your debts Christine Lagarde how does the fund view this issue you talk specifically you talk specifically but somewhat elliptically obviously about countries that have room for maneuver and countries that don't how do you define room for maneuver in the present context first of all in terms of general principle I remember the think it was the beginning of 2009 at the time when the IMF actually recommended stimulus packages indeed I remember don't miss your predecessor did so on this panel I think for the first time and there was actually a hint that 2% of GDP would be probably appropriate for each and every country in the world to actually to actually react to the unfolding of the then financial crisis arising out of the United States and that was a shift at the time my sense is that we need to be careful with those sort of broadcasted general one-size-fits-all messages because each country specific each country is different the amount of public spending will vary from one country to the other and I think that the message needs to be tailored and made really specific to the situation of the country so first principle no one-size-fits-all it has to be tailor-made custom-made customized to the specificities of the country we see countries in general falling into three categories first category is that of countries that are in such bad shape or have so much room to tighten that they just have to go for fiscal consolidation go fast go deep get it done the old system if you will you know front-loaded programs and and bounce back from a hard prescription second category is those countries that should let automatic stabilizers play out that's the case for the UK for instance the fiscal revenues go down because the state collects less tax it spends a bit more because social safety nets have to play out and that is fine and that's you know a perfect track to be on and then you have some countries not many at the moment but you know I'm not going I'm not going to go through the list of them but around the world I would say there is a handful of them that have the fiscal space to actually slow down the fiscal consolidation path without violating their domestic rules because some of them have those in-house domestic rules that have to do with fiscal consolidation and balance budget and all the rest of it so that's Martin what I would what I would define as those three categories customized treatment of fiscal consolidation that is that is needed Mark honey very to very quick points to very quick points if I may one of the things that has to be done when making those judgments about consolidation is to reinforce an enabling environment for business investment and I mean I will use the UK as an example with the with the focus on infrastructure and and public-private partnerships the corporate tax rate these are the type of things that help also can help unlock that business investment provided you a financial system so that is incredibly important but let me just draw attention we don't have represented the US on this panel there's we have two and a half percentage points at least a fiscal drag built in into the United States in 2013 I think there's some illusion perhaps I don't want to put words in your mouth Christine but I just did to the United States in that situation in an environment where you have a central bank that is clearly at the zero lower bound for a long period of time of its purchasing assets that you are the reserve currency one has to question the wisdom of fully of having that level to starting January 1 2013 two and a half percentage points down on the level of GDP because of the fiscal multipliers I'm going to turn it to the floor I mean we could go on for many more hours but I think give the opportunity to people to ask questions very difficult to see people the person in the third row I think you'd stand up say you are and it's a very very brief question Larry Elliott's of the Guardian there are 75 million young people under 25 without work in the world today how serious a problem is this and what should be done about it I've thought it's much more than 75 million but we won't quibble over numbers I'll take two or three questions and handle them person in the front row would be good enough to stand up and thank you and Luigi but the owner from Breven Harbour assets management I just want to maybe it's a question for Mrs. Lagarde I want to put together the comment by comment by Governor Carney and by yourself Governor Carney spoke very correctly about the balance of payment crisis you spoke about competitiveness and I think if one puts the two things together this means that there is a euro crisis I mean one has to face it I mean the problems last time which are stemming from Europe stem from competitive lack of different competitiveness so this is why we need the structure reforms and so on this means also that quite likely when the euro experiment was started was not optimal do we have to think if you want to think about confidence in the market do we have to think and now the structure reforms can make this area an optimal currency area within a sufficiently short period of time this is confidence the rest of as Governor Carney said correctly I think these firewalls if without that don't matter very much thank you very much okay I'll take one more question somewhere at the back I can't see very clearly I'm right somewhere in back yes that would put somebody over there it's incredibly bright you if I'd like to hear chief executive thanks and governor can as view on whether or not the ECB should participate in the Greek restructuring with the ECB should participate or not on the Greek haircut ah the Greek haircut and who was the other person you use you wanted apart from governor Carney Donald Chang chief executive ah Greek haircut okay good questions I think I'll ask Bob Zellick first 75 million young people unemployed and actually must be far more problem not just in the development in the developing world we see it as a central issue in what's happened in North Africa in the Middle East it's a central concern for you from your perspective both the World Bank and more widely how important is this issue and what if anything should be done about it well it's important across a range of things number one you know what we've seen unfortunately is if people often don't get a good start in terms of employment and skills that can affect them their whole lives number two this is a tremendously then underutilized resource to contribute to countries and economies three there's a specific issue that we're dealing with and others are about the the school the work transition and some of the skills development that will be part of this so all of this is part of the bigger issue that I think some of us have been trying to draw out which is that it's not enough to muddle through it's it's not enough to just get liquidity to the system and it's frankly it's not enough just to do the fiscal fix there's a other tone here that you've heard a little bit particularly from the emerging markets and a little bit from Mark which is and and also from George about the structural reforms about trying to create the basis for competitors going forward but the reality is if you're going to do fiscal consolidation and you're going to do structural reforms it's awful helpful to have some in context of growth occurring and there's different ways that that can occur that was your question on the fiscal part but frankly there's other aspects that are related to open markets and trade and frankly removing some of the impediments to growth that we see in the private sector where again there's resources to be deployed part of the point here which is not a very big point presumably is that policy has to be much more in the round we're so focused on from fiscal and financial problems we're missing that but let me just just what one little point on this because I will almost said it on your other point you know Europe is so focused on the eurozone you know as you've seen just in the past couple days we've tried to organize some support for southeastern Europe and the Balkans some of these are European Union countries we got some information from the BIS yesterday that verified what I've been worried about which is you're going to see a credit contraction as these banks pull back you've got big events in North Africa the events in the eurozone European Union are definitely going to have the effects on their trade and their ability to overcome some of the economic issues related to political problems we're seeing it in trade finance and so again I do think there's a little bit of myopia even on the fiscal side because some of this goes back to how you implement the banking regulations and frankly the European Banking Authority's approach towards the higher capital standards in my view did not take account of these risks I think it's now adjusting but so we've got ripple and wave effects of this and they affect young people old people in a lot of regions that we should be concerned about just take two very quick points for you Mark Carney one of them was raised here as a member of the trade union of central bankers should central bankers take losses in when they've acted as lender of last resort in a full hardy manner and the second question dip since I rated earlier barbers just raised it again is the regulatory system which you are of course a central part actually providing a completely confused message closing doors after stable closing stable doors after horses have fled so making them the banks incredibly resilient at exactly the point of trying to move at exactly the point when actually you want to regulatory forbearance on the on the first question on the Greek restructuring a part of the spirit I took from Donald sangh's remarks is get it right when you do something do it quickly do it right what's incredibly important with this what comes out of the current discussions is that it's credible and so the size of the haircut the aggregate haircut to Greece has to lead to a credible debt sustainability analysis full stop it can't be just meeting a number because the number was there before and if that requires a fuller participation from the private sector and potentially the public sector so be it then the question is how should it be done for the public sector of it's not going to surprise you as a card carrying member of the guild of central bankers that fiscal decisions are the responsibilities of governments monetary decisions of the central banks central banks ultimately backed by governments it's better to sort these things out ex ante but it may need to be sorted out in real time there is a backstop in Europe it should be used on financial reform three levels of clarity we need to provide we provided it on capital to be absolutely clear the capital rules are out there the definitions are there banks know what they are including the city surcharges those countries who had additional supplements have done so anybody else should speak now or hold back capitals clear it's a question of taking time to get there the second clarity which we should establish this year is clarity on resolution ending too big to fail I'm not sure we're going to get there for every institution but we should we should get as far as we can and make it clear what's left to be done but then the final clarity we really need to get back to is to be absolutely clear that actually there's a tremendous value to open markets cross-border markets not just within Europe we talked about it but global cross-border markets there's lots of worthy boring but important plumbing that we're doing in derivative markets repo markets other things but we need to think about the implications of regulation with respect to market-making proprietary trading shadow banking the net impact on cross-border flows of capital which is going to be important to get the global economy from a three percent per annum to a four percent five and Bob's points and trade finance are fully appropriate final question are we trying to turn the euro zone into an optimal currency area exposed in about a year or two and if so is this in any way a viable project I think that was the question if I it wasn't that can't be re-asked now as Christine Lagarde which have you on that question is perhaps there's a wrinkle on this but the way I put it in something you mentioned competitiveness competitiveness is a relative not an absolute concept so we're saying that some people should become competitive relative to other people we know who what who we mean are the other people prepared to accept becoming less competitive that's essentially the same question but don't you think Martin that everybody has to be more competitive I know it's a relative it's a relative issue and if you measure against somebody else and that somebody else will never say I want to become more efficient everybody can become more and become more efficient but everybody can't become more competitive it's very important okay every everybody has to compete to be more efficient can we settle on that great okay well that's what is needed and it's not something that the IMF can actually monitor control or encourage by way of its programs because our programs are short term generally and they deal with balance of payment issues so I can see your point about our current programs particularly in that part of the world with a bit of ambiguity as to the purpose that the countries have given the length of time that is going to take some of them to consistently compete for more efficiencies given where they start from but we cannot give up on that either and I think that it's it's perfectly legitimate that the IMF continues to be involved as a gesture as a statement from the multilateral international community and with the tools that it has to be actually on the ground to make sure that there is delivery that there is implementation of some of the conditionalities that are embedded in our programs I think that will help in any event. But presumably we would agree and just Chancellor Osborne we all accept truly that the structural reforms are necessary essential but the underlying efficiency stroke, competitiveness problems which have emerged in the eurozone these aren't going to be fixed in a few months we're talking about a multi-year program this of course is true for all countries isn't that the case? Well these structural reforms will take many many years but I come back to the point I made earlier I don't think they're ever going to be sufficient I think to make the single currency work in the long term there are going to be permanent fiscal transfers in my view that can be done in an opaque way through a central bank it can be done in a semi-opaque way through euro bonds or it can be done through direct budget transfers but that is what's required to make a single currency work and I'm not claiming that's a particularly easy thing to deliver politically within the eurozone but I think it is an essential component to bringing long term stability to the euro Minister Furukawa you wanted to comment on this issue Speaking of the competitiveness I think it's very important each country is trying to strengthen its competitiveness but in the global world the fair competition is very important sometimes a country is trying to make use of devaluate their own currencies and by making a devaluated currency they're trying to improve their competitiveness but it's not a fair competition so under the fair currency currency level the fair competition it really works so I think that not to use the currency policy as a way of increase their own competitiveness I can't imagine this is directed at a country that has just announced a zero rate to 2014 I think which will mean effectively seven years of free money I think I can possibly take one incredibly short question for one person if anybody has a question or we exhausted the audience okay a very short question for one person hello yeah so the world has about seven billion people according to the latest figures the advanced region Europe America Japan collectively have under one billion so I just wondered what the IMF World Bank and the leadership of the advanced countries are proposing in 2012 for the poor regions of the world and there are four billion poor people in the world so what are the policies for them I'm going to give Bob one minute to answer that question I'm sorry for the that's okay which is obviously in some sense the most important question asked well it's actually also the opportunity because you know some two-thirds of global growth has come from the developing world over the past five years so there's opportunities in areas such as infrastructure which can create jobs today productivity tomorrow also services and goods from the developed world so we're trying to emphasize that second because of the risks we're trying to do whatever we can to draw lessons from other developing countries about effective social safety nets there's been tremendous success of this Mexican and Brazilian model we've now extended to some 40 other countries but for some countries they don't have the capacity you need other alternatives and so and third and that's going to be important for food security or whole coasts of things that could happen and third is to continue the structural reforms that I was referring to which help make the private sector possibilities in emerging markets so if you're actually thinking about allocation of capital to produce growth in the global system this should be the bright spot I'm going to have to conclude I'll just make four remarks about what has been said and one three marks and one sort of concluding point of course I think it's been a very rich discussion I'd love to have gone on longer I think one of the biggest lesser things that comes out of this the world economy is slowing the eurozone is clearly still a concern we haven't talked fully about some very important parts of the world but I think that concern remains it's very very important to remember that the the great thing that has made a difference to people's perception above all is perception of monetary policy in Europe the US is doing this again I mean essentially ever since the beginning of the crisis we've used central banks in a completely unprecedented way completely unprecedented way I think this was absolutely necessary but it is incredibly important to understand that as long as that remains the case we're still in a crisis as long as we have these monetary policies that the central banks are telling you that this is a contained depression that's what these rates mean what else could they mean the second point which comes out very clearly is a very strong sense that the eurozone can't should be help from outside but only if it helps itself and this panel which is a wall of outsiders seem pretty clearly agreed that it hasn't helped itself enough in a whole range of respects both in the short term and the long term and the fact that the outside world thinks that way is itself very very very important the third point strength is that there's a lot of discussion about competition competitiveness fair competition austerity issues underneath all that in the world we're talking about any economist starts thinking about beggar my neighbor concerns and that links with the trade policy issues if everybody is fighting for market share by depressing wages and reducing domestic demand we have an adding up problem we really have to think about and the final point I would make is which it comes out again and again is that we're living in a different world in terms of relative weights of countries relative importance of countries and I think the west still just hasn't begun to wake up to this the significance of this fact and so I will make one last very provocative remark which is that I will know that we have a different we in the west have recognized this heads and brilliant heads of the international organizations on this panel will be replaced by people who are respectively not European and not American or in the other order I don't expect it to happen but it has to happen I think we should congratulate the panel we've had a very rich discussion and I hope it has raised your concerns and you don't go away from Davos as complacent as some people seem to me to have become we haven't begun to get through this incredible mess that we in the west have created thank you very much